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United States Government Accountability Office:
GAO:
Report to the Subcommittee on Energy and Water Development, Committee
on Appropriations, U.S. Senate:
March 2012:
Modernizing The Nuclear Security Enterprise:
New Plutonium Research Facility at Los Alamos May Not Meet All Mission
Needs:
GAO-12-337:
GAO Highlights:
Highlights of GAO-12-337, a report to the Subcommittee on Energy and
Water Development, Committee on Appropriations, U.S. Senate.
Why GAO Did This Study:
Plutonium—-a man-made element produced by irradiating uranium in
nuclear reactors-—is vital to the nuclear weapons stockpile. Much of
the nation’s current plutonium research capabilities are housed in
aging facilities at Los Alamos National Laboratory in New Mexico.
These facilities pose safety hazards. The National Nuclear Security
Administration (NNSA) has decided to construct a multibillion dollar
Chemistry and Metallurgy Research Replacement Nuclear Facility (CMRR)
to modernize the laboratory’s capabilities to analyze and store
plutonium. GAO was asked to examine (1) the cost and schedule
estimates to construct CMRR and the extent to which its most recent
estimates reflect best practices, (2) options NNSA considered to
ensure that needed plutonium research activities could continue, and
(3) the extent to which NNSA's plans reflected changes in stockpile
requirements and other plutonium research needs. GAO reviewed NNSA and
contractor project design documents and visited Los Alamos and another
plutonium facility at Lawrence Livermore National Laboratory in
California.
What GAO Found:
The estimated cost to construct the CMRR has greatly increased since
NNSA’s initial plans, and the project’s schedule has been
significantly delayed. According to its most recent estimates prepared
in April 2010, NNSA determined that the CMRR will cost between $3.7
billion and $5.8 billion—-nearly a six-fold increase from the initial
estimate. Construction has also been repeatedly delayed and, in
February 2012 after GAO provided its draft report to NNSA for comment,
NNSA decided to defer CMRR construction by at least an additional 5
years, bringing the total delay to between 8 and 12 years from NNSA’s
original plans. Infrastructure-related design changes and longer-than-
expected overall project duration have contributed to these cost
increases and delays. GAO’s review of NNSA’s April 2010 cost and
schedule estimates for CMRR found that the estimates were generally
well prepared, but important weaknesses remain. For example, a high-
quality schedule requires a schedule risk analysis that incorporates
known risks to predict the level of confidence in meeting a project’s
completion date and the amount of contingency time needed to cover
unexpected delays. CMRR project officials identified hundreds of risks
to the project, but GAO found that these risks were not used in
preparing a schedule risk analysis. As a result of these weaknesses,
NNSA cannot be fully confident, once it decides to resume the CMRR
project, that the project will be completed on time and within
estimated costs.
NNSA considered several options to preserve its plutonium-related
research capabilities in its decision to build CMRR at Los Alamos.
NNSA assessed three different sizes for a new facility—22,500, 31,500,
and 40,500 square feet. In 2004, NNSA chose the smallest option. NNSA
officials stated that cost was the primary driver of the decision, but
that building a smaller facility would result in trade-offs, including
the elimination of contingency space. In the end, NNSA decided to
build a minimally-sized CMRR facility at Los Alamos with a broad suite
of capabilities to meet nuclear weapons stockpile needs over the long-
term. These capabilities would also be used to support plutonium-
related research needs of other departmental missions.
NNSA’s plans to construct CMRR focused on meeting nuclear weapons
stockpile requirements, but CMRR may not meet all stockpile and other
plutonium-related research needs. NNSA analyzed data on past workload
and the expected need for new weapon components to help ensure CMRR’s
design included the necessary plutonium-related research capabilities
for maintaining the safety and reliability of the nuclear stockpile.
However, some plutonium research, storage, and environmental testing
capabilities that exist at Lawrence Livermore National Laboratory may
no longer be available after NNSA consolidates plutonium-related
research at Los Alamos. Furthermore, NNSA conducts important plutonium-
related research in other areas such as homeland security and nuclear
nonproliferation, but it has not comprehensively analyzed plutonium
research and storage needs of these other programs outside of its
nuclear weapons stockpile work and therefore cannot be sure that the
CMRR plans will effectively accommodate these needs. As a result,
expansion of CMRR or construction of more plutonium research and
storage facilities at Los Alamos or elsewhere may be needed in the
future, potentially further adding to costs.
What GAO Recommends:
GAO is making recommendations to improve CMRR’s schedule risk analysis
and to conduct an assessment of plutonium research needs. NNSA agreed
with GAO’s recommendations to assess plutonium research needs, but
disagreed that its schedule risk analysis should be revised, citing
its recent decision to defer the project. GAO clarified the
recommendation to specify that NNSA should take action when it resumes
the project.
View [hyperlink, http://www.gao.gov/products/GAO-12-337]. For more
information, contact Gene Aloise at (202) 512-3841 or aloisee@gao.gov.
[End of section]
Contents:
Letter:
Background:
CMRR's Initial Cost Estimate Has Significantly Increased and Its
Schedule Has Been Delayed:
NNSA Considered Several Options to Preserve Plutonium-Related Research
Capabilities, but Ultimately Chose to Build a Minimally Sized Facility
at Los Alamos:
CMRR May Meet Nuclear Weapons Stockpile Requirements but May Not
Accommodate Other Plutonium-Related Research Needs:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: Summary Assessment of CMRR's Cost Estimate Compared to
Industry Best Practices:
Appendix III: Summary Assessment of CMRR's Schedule Estimate Compared
to Industry Best Practices:
Appendix IV: Comments from the National Nuclear Security Administration:
Appendix V: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: Extent to Which CMRR's Cost Estimate Met Industry Best
Practices:
Table 2: Extent to Which CMRR's Schedule Estimate Met Industry Best
Practices:
Abbreviations:
CMRR: Chemistry and Metallurgy Research Replacement Nuclear Facility:
DOE: Department of Energy:
NNSA: National Nuclear Security Administration:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
March 26, 2012:
The Honorable Dianne Feinstein:
Chairman:
The Honorable Lamar Alexander:
Ranking Member:
Subcommittee on Energy and Water Development:
Committee on Appropriations:
United States Senate:
Plutonium--a man-made radioactive element produced by irradiating
uranium in nuclear reactors--is vital to the nation's nuclear weapons
stockpile. Plutonium is used in "pits"--the spherical central core of
a nuclear weapon that is compressed with high explosives to create a
nuclear explosion. Several kilograms of plutonium are sufficient to
make a nuclear bomb, so plutonium must be stored under extremely high
security to protect it from theft. In addition, exposure to small
quantities is dangerous to human health, so that even inhaling a few
micrograms creates a long-term risk of lung, liver, and bone cancer
and inhaling larger doses can cause immediate lung injuries and death.
Also, if not safely contained and managed, plutonium can be unstable
and spontaneously ignite under certain conditions. Therefore, any
facility that stores or conducts research on plutonium must be
robustly designed to safely prevent the uncontrolled release of
hazardous material to the environment and to securely store the
material to protect it from potential theft.
Much of the nation's current plutonium research and development
capabilities are housed at the Los Alamos National Laboratory in New
Mexico. The laboratory is one of the National Nuclear Security
Administration's (NNSA) two primary laboratories responsible for
designing nuclear weapons components that contain plutonium; the other
is Lawrence Livermore National Laboratory in California.[Footnote 1]
Los Alamos has been supporting the production of new pits since the
closure of the Department of Energy's (DOE) Rocky Flats Plant near
Denver, Colorado, in 1989, as well as homeland security activities,
energy programs, and nuclear nonproliferation activities.
The Chemistry and Metallurgy Research nuclear facility at Los Alamos
conducts plutonium-related research that is crucial to effectively
maintain the nuclear weapons stockpile. However, the facility is
nearly 60 years old, and its aging infrastructure poses safety
hazards. In addition, the facility is situated on a seismic fault
line, raising concerns about the effect of earthquakes on the safety
and security of plutonium used for research or stored at the facility.
Because of these concerns, NNSA has decided to construct a Chemistry
and Metallurgy Research Replacement Nuclear Facility (CMRR) at Los
Alamos that will (1) modernize the laboratory's capabilities to
analyze plutonium and (2) store plutonium in vaults that provide a
secure environment that protects against its accidental or intentional
misuse and minimizes health risks for workers and the surrounding
communities.[Footnote 2] Originally estimated to begin construction in
2008, the project has experienced several delays and, in February 2012
after we had provided a draft of this report to NNSA for its comments,
NNSA announced that it had decided to defer construction of the
facility for at least 5 years.
NNSA's proposed construction of the CMRR is part of a larger strategic
effort to consolidate nuclear materials from other locations across
the United States and to modernize nuclear research, development, and
production facilities that support the nuclear weapons stockpile. For
example, NNSA's plans call for some of the plutonium-related research
currently conducted at a high security facility at Lawrence Livermore
National Laboratory known as Superblock to be transferred to CMRR.
NNSA's plans also call for much of the plutonium currently stored at
Livermore's Superblock to be consolidated at Los Alamos for continued
research activities, and for the other material not needed for
research at Livermore or Los Alamos to be stored at DOE's Savannah
River Site pending final disposition. In addition, the nuclear weapons
stockpile's requirements for plutonium are evolving. Specifically, the
New Strategic Arms Reduction Treaty that the United States and Russia
signed in April 2010 is to reduce the number of deployed strategic
nuclear warheads by 30 percent. As a result of this treaty and NNSA's
approach for modernizing the stockpile through the refurbishment of
existing weapons, demand for newly manufactured pits has fluctuated in
recent years. In light of these fluctuations, NNSA's current strategy
is to design the CMRR around a broad suite of capabilities--equipment,
processes, and expertise--that it anticipates may be needed to fulfill
the stockpile's requirements regardless of the specific demand for pits.
Because of the extensive safety and security measures required to
analyze and store plutonium, the cost of constructing new nuclear
facilities is typically a multibillion dollar venture. In the past, we
have reported on several major DOE and NNSA construction projects that
faced cost increases and schedule delays.[Footnote 3] DOE's long-
standing difficulties in preparing cost and schedule estimates is one
reason contract management in NNSA and DOE's Office of Environmental
Management is on our list of federal programs at high risk of fraud,
waste, abuse, and mismanagement.[Footnote 4] Because other federal
agencies have also had problems developing high-quality cost and
schedule estimates, we issued a cost-estimating guide in March 2009,
consisting of best practices drawn from across industry and
government, to assist agencies to develop cost and schedule estimates
that are well-documented, comprehensive, accurate, and credible.
[Footnote 5]
In this context, you asked us to review NNSA's plans for constructing
the CMRR. Specifically, our objectives were to examine (1) NNSA's cost
and schedule estimates for the construction of the facility and the
extent to which its most recent estimates reflect best practices, (2)
options NNSA considered to ensure that plutonium-related research
activities will continue as needed, and (3) the extent to which NNSA's
plans to construct the CMRR and its consideration of options reflected
changes in nuclear weapons stockpile requirements and the plutonium-
related research needs of other departmental missions.
To examine NNSA's cost and schedule estimates for the CMRR project and
the extent to which its current estimates reflect best practices, we
reviewed relevant NNSA documents and met with agency and Los Alamos
project officials to discuss the changes in the estimates that have
occurred to date and the reasons for them. We compared NNSA's most
recent cost and schedule estimates--prepared in April 2010--with best
practices contained in our cost estimating guide and gave project
officials the opportunity to provide and discuss feedback on our
assessment. To examine the options NNSA considered to ensure that its
plutonium-related work will continue, we reviewed NNSA and contractor
documents on plutonium research needs and the various options
available to meet those needs. We also met with NNSA and contractor
officials to better understand how these options were analyzed to
determine the best approach to fulfill NNSA's mission. To determine
the extent to which NNSA's plans reflect changes in nuclear weapons
stockpile requirements, we reviewed NNSA analyses that were used to
support CMRR project decisions and met with NNSA officials to
determine if these analyses were comprehensive and reflected up-to-
date nuclear weapons stockpile requirements. We also visited the Los
Alamos and Lawrence Livermore national laboratories. To ensure the
data we used were sufficiently reliable, we compared information
gathered from a variety of data sources. For example, we interviewed
officials from both Los Alamos and Livermore to obtain separate and
independent perspectives on CMRR project plans. We determined the data
were sufficiently reliable for our purposes.
We conducted this performance audit from February 2011 through
February 2012 in accordance with generally accepted government
auditing standards. Those standards require that we plan and perform
the audit to obtain sufficient, appropriate evidence to provide a
reasonable basis for our findings and conclusions based on our audit
objectives. We believe that the evidence obtained provides a
reasonable basis for our findings and conclusions based on our audit
objectives. Appendix I contains a detailed description of our scope
and methodology.
Background:
In the mid-1990s, Congress directed DOE to develop the Stockpile
Stewardship Program to provide a single, highly integrated technical
program for maintaining the continued safety and reliability of the
nuclear weapons stockpile. Stockpile stewardship comprises activities
associated with conducting nuclear weapons research, design, and
development; maintaining the knowledge base and capabilities to
support nuclear weapons testing; and assessing and certifying nuclear
weapons safety and reliability. Stockpile stewardship includes
operations associated with producing, maintaining, refurbishing,
surveilling, and dismantling the nuclear weapons stockpile. The
Stockpile Stewardship Program's objectives were updated as a result of
the 2010 Nuclear Posture Review, which establishes the U.S. nuclear
policy for the next 5 to 10 years, including the nation's nuclear
weapons stockpile requirements.[Footnote 6] The Nuclear Posture Review
and the Stockpile Stewardship Program reinforce the New Strategic Arms
Reduction Treaty between the United States and Russia. As part of this
treaty, the United States has agreed to reduce the size of its
strategic nuclear weapons stockpile from a maximum of 2,200 to 1,550
weapons, with the remaining weapons in the stockpile continuing to be
an essential element of U.S. defense strategy.
Nuclear stockpile requirements include a pit production capacity that
is defined by estimating the number of pits NNSA needs to manufacture
annually to effectively support the nuclear weapons stockpile. The
demand for pits has fluctuated over the past decade for various
reasons. Until 2005, NNSA planned to produce pits in a large-scale
manufacturing plant to be built called the Modern Pit Facility, which
would have increased pit production capacity per year to a range of
125 to 450 pits. This project was terminated and, at around the same
time, NNSA began to study a new approach for modernizing the
stockpile, called the Reliable Replacement Warhead program, which
would have produced 50 pits per year and which was also short-lived.
Through this program, NNSA would have designed new weapon components,
including pits, to be safer and easier to manufacture, maintain,
dismantle, and certify without nuclear testing. Since 2008, NNSA's
guidance has established pit capacity for future production at about
20 pits per year, with an upper range limit of 80 pits per year. In
addition, NNSA has recently determined that pit lifetimes are longer
than anticipated and that it may increase the reuse of existing pits,
reducing the demand for newly manufactured pits. Currently, pit
capacity requirements are uncertain and still in flux. Demand may
again fluctuate as a result of the Nuclear Posture Review and changes
to the Stockpile Stewardship Program. For example, there are still
unknowns in implementing the Nuclear Posture Review and modernization
work on each nuclear weapon type may require a varied number of new
pits.
To execute the activities to maintain and refurbish the nation's
existing nuclear weapons stockpile, NNSA oversees eight sites that
comprise its nuclear security enterprise--formerly known as the
nuclear weapons complex--which includes three national weapons
laboratories, four production plants, and a test site, all of which
carry out missions to support NNSA's programs. One of these sites, Los
Alamos National Laboratory, plays a crucial role in carrying out
NNSA's maintenance of the nuclear weapons stockpile, including (1)
production of weapons components, (2) assessment and certification of
the nuclear weapons stockpile, (3) surveillance of weapons components
and weapon systems, (4) assurance of the safe and secure storage of
strategic materials, and (5) management of excess plutonium
inventories. Los Alamos was established in 1943 during the Manhattan
Project in northern New Mexico. It is a multidisciplinary,
multipurpose institution primarily engaged in theoretical and
experimental research and development. A significant portion of Los
Alamos' work is focused on ensuring that nuclear weapons stockpile
needs are met. Since 2000, pit production has been established within
the Plutonium Facility Complex at Los Alamos's Technical Area 55, and
certified pits have been produced over the past 5 years in that
facility.
A particularly important facility at Los Alamos within Technical Area
55 is the nearly 60-year-old Chemistry and Metallurgy Research
facility. The facility has unique capabilities for performing
analytical chemistry, material characterization, and research and
development related to plutonium. This includes activities that
support the manufacturing, development, and surveillance of nuclear
weapons pits; programs to extend the life of nuclear weapons in the
stockpile; and nuclear weapon dismantlement efforts. This pit
production mission support work was first assigned to Los Alamos in
1996. NNSA also currently maintains some plutonium-related research
capabilities at other facilities, such as Livermore's Superblock
facility. These capabilities are necessary components of NNSA's
overall stockpile management strategy. NNSA and DOE also use the
unique plutonium-related capabilities located at Los Alamos and
Livermore to support the plutonium-related research needs of other
national security missions and activities outside of the nuclear
weapons stockpile work, including nuclear nonproliferation activities;
homeland security activities, such as nuclear forensics and nuclear
counterterrorism; waste management; and material recycle and recovery
programs.
The Chemistry and Metallurgy Research facility was initially designed
and constructed to comply with building codes in effect during the
late 1940s and early 1950s. In 1992, recognizing that some of the
utility systems and structural components were aging, outmoded, and
generally deteriorating, DOE began upgrading the facility. These
upgrades addressed specific safety, reliability, consolidation, and
security issues with the intent of extending the useful life of the
facility for an additional 20 to 30 years. However, beginning in about
1997 and continuing to the present, a series of additional operational
and safety concerns have surfaced. In particular, a 1998 seismic study
identified two small parallel faults beneath the northern portion of
the Chemistry and Metallurgy Research facility. The presence of these
faults raised concerns about the structural integrity of the building
in the event of an earthquake. DOE and NNSA determined that, over the
long term, Los Alamos could not continue to operate the mission-
critical support capabilities in the existing Chemistry and Metallurgy
Research facility at an acceptable level of risk to worker safety and
health. To ensure that NNSA can fulfill its national security mission
for the next 50 years in a safe, secure, and environmentally sound
manner, NNSA decided in 2004 to construct a replacement facility,
known as the CMRR.[Footnote 7]
Federal agencies, including DOE and NNSA, have experienced long-
standing difficulties in completing major projects within cost and on
schedule. To provide assistance in preparing high-quality cost and
schedule estimates, we compiled best practices used throughout
government and industry and, in March 2009, issued a guide outlining
the criteria for high-quality cost and schedule estimates.
Specifically, our guide identified four characteristics of a high-
quality, reliable cost estimate: (1) credible, (2) well-documented,
(3) accurate, and (4) comprehensive.[Footnote 8] In addition, our cost
guide lays out 12 key steps that should result in high-quality cost
estimates and hundreds of best practices drawn from across industry
and government for carrying out these steps. For example, one of the
key steps includes conducting an independent cost estimate--that is,
one generated by an entity that has no stake in the approval of the
project but uses the same detailed technical information as the
project estimate. Having an independent entity perform such a cost
estimate and comparing it to the project team's estimate provides an
unbiased test of whether the project team's cost estimate is reasonable.
Our guide also identified nine best practices for effectively
estimating schedules: (1) capturing key activities, (2) sequencing key
activities, (3) assigning resources to key activities, (4)
establishing the duration of key activities, (5) integrating key
activities horizontally and vertically, (6) establishing the critical
path for key activities, (7) identifying total float (i.e., the time
that activities can slip before the delay affects the completion
date), (8) performing a risk analysis of the schedule, and (9)
updating the schedule using logic and durations to determine dates.
[Footnote 9] Many of these practices have also been incorporated into
DOE's recent guidance for establishing performance baselines.[Footnote
10]
CMRR's Initial Cost Estimate Has Significantly Increased and Its
Schedule Has Been Delayed:
The estimated cost to construct the CMRR, according to estimates
prepared in April 2010, is nearly six times higher than the project's
initial cost estimate that was prepared in 2005. The project's
estimated completion date has also been delayed by at least 8 to 12
years. Our review of these most recent detailed cost and schedule
estimates for the CMRR project found that the estimates generally
reflect best practices, but are not yet entirely reliable.
Estimated Cost to Construct CMRR Has Increased by Almost Six-Fold, and
Its Scheduled Completion Has Been Delayed:
Since CMRR was first proposed, its costs have risen significantly, and
its schedule has been repeatedly delayed. Specifically, in 2005, when
DOE developed initial plans for CMRR, it estimated that the project
would cost from $745 million to $975 million and would be completed
between 2013 and 2017. This estimate was prepared using preliminary
information--before a detailed project design was substantially under
way--and was therefore considered by DOE to be a rough estimate. In
April 2010, NNSA estimated that the CMRR will cost between $3.7 and
$5.8 billion--a nearly six-fold increase from the initial estimate--
and that construction will be complete by 2020--a 3-to 7-year delay.
In February 2012, after we had provided NNSA with a draft of this
report for its comments, NNSA announced that it had decided to defer
CMRR construction by at least an additional 5 years, bringing the
total delay from NNSA's original plans to 8 to 12 years.
NNSA officials explained that the majority of the cost increases
occurred because of changes to the facility's design and because of
project delays. Specifically,
* Modifications to the facility's design. To address concerns about
seismic activity, the project design was modified to strengthen the
facility to withstand a potential earthquake. For example, significant
design changes resulted from the need to thicken the concrete walls to
satisfy increasingly stringent seismic requirements. In addition, to
proceed to final design, project officials had to evaluate the
potential effects of an earthquake on the facility's complex
ventilation system. This effort included several studies,
consultations with vendors and other designers, and an assessment of
the availability of equipment that would meet seismic requirements.
Overall, Los Alamos estimates the seismic related design changes
increased the project costs by almost $500 million.
* Delays in the construction start date and longer overall project
duration. CMRR construction was originally expected to begin in 2008,
but was first delayed until 2013 and is now not expected to begin
before 2018. The initial delay in starting construction from 2008 to
2013 had varying causes, including facility design changes described
previously as well as the additional time needed for NNSA to determine
where and how to consolidate plutonium operations in the nuclear
security enterprise, according to project officials. This delay
starting construction pushed the estimated construction completion
date from between 2013 and 2017 to 2020--3 to 7 years later than
initially expected. At the time, the facility was expected to be
operational in 2022.[Footnote 11] These delays further increased
costs, partly because inflation meant that equipment and materials
became more expensive as time passed. In addition, the longer project
duration also contributes to increases in the cost of workers' wages
and salaries. Overall, project officials estimate that about $1.2
billion in additional costs resulted from these schedule delays. In
February 2012, NNSA announced another significant project delay--at
least an additional 5-year deferral in starting the construction of
the CMRR--resulting in a total of an 8 to 12 year delay from NNSA's
original plans. However, NNSA has not yet determined the impact to the
project's costs as a result of this additional delay.
NNSA's Most Recent Cost and Schedule Estimates Generally Meet Industry
Best Practices, but Are Not Yet Entirely Reliable:
Our review of NNSA's most recent cost and schedule estimates for the
CMRR construction project found that the estimates were generally well
prepared but that important weaknesses remain. Specifically, we found
that the CMRR cost estimate prepared in April 2010 exhibits most of
the characteristics of high-quality, reliable cost estimates. As
identified by the professional cost-estimating community and
documented in our cost-estimating guide, a high-quality cost estimate
is comprehensive, well-documented, accurate, and credible.[Footnote
12] Our review of the CMRR cost estimate found that the cost estimate
exhibits three of the four characteristics of a high-quality estimate
by being substantially comprehensive, well documented, and accurate,
but only partially credible, as shown in table 1. Appendix II contains
additional information about each of the four general best practice
characteristics and our assessment of the estimate compared to
detailed best practices.
Table 1: Extent to Which CMRR's Cost Estimate Met Industry Best
Practices:
Best practice characteristic: Comprehensive;
Overall assessment[A]: Substantially met.
Best practice characteristic: Well documented;
Overall assessment[A]: Substantially met.
Best practice characteristic: Accurate;
Overall assessment[A]: Substantially met.
Best practice characteristic: Credible;
Overall assessment[A]: Partially met.
Source: GAO analysis of CMRR project cost information.
[A] The ratings we used in this analysis are as follows: "Not met"
means CMRR provided no evidence that satisfies any of the
characteristic. "Minimally met" means CMRR provided evidence that
satisfies a small portion of the characteristic. "Partially met" means
CMRR provided evidence that satisfies about half of the
characteristic. "Substantially met" means CMRR provided evidence that
satisfies a large portion of the characteristic. "Fully met" means
CMRR provided complete evidence that satisfies the entire
characteristic.
[End of table]
The CMRR cost estimate only partially met industry best practices for
credibility because project officials did not use alternate methods to
crosscheck major cost elements to see whether the results were similar
under different estimating methods. In addition, according to our
guide, there are varying methods of validating an estimate, but the
most rigorous method is the independent cost estimate that is
generated by an entity that has no stake in the approval of the
project. Conducting an independent cost estimate is especially
important at major milestones because it provides senior decision
makers with a more objective assessment of the likely cost of a
project. A second, less rigorous method for validating a project's
cost estimate--an independent cost review--focuses on examining the
estimate's supporting documentation and interviewing relevant staff.
Independent cost reviews address only the cost estimate's high-value,
high-risk, and high-interest aspects without evaluating the remainder
of the estimate. An independent cost review on the entire CMRR project
was initiated in 2011, but the more rigorous method of validating--
conducting an independent cost estimate--has only been used on a small
portion of the project representing about 6 percent of the project's
total costs.[Footnote 13] According to NNSA officials, DOE orders do
not require NNSA to seek an independent cost estimate until just prior
to establishing the project baseline, and project officials told us
NNSA is preparing to have one conducted before the project baseline is
established. However, until a quality independent cost estimate is
completed on the entire project or another means of validating the
estimate for the project, DOE and NNSA officials cannot be confident
that the current cost estimate is completely credible.
With regard to CMRR's schedule, the project's schedule estimate fully
met two and substantially met six out of nine best practices for a
high-quality schedule as identified by our guide and minimally met
one. For example, two of the best practices the estimate fully met
concerned how well it (1) captured all of the project's activities,
including design, construction, and other tasks that collectively form
a comprehensive schedule, and (2) is successfully kept up-to-date.
Table 2 lists best practices along with our assessment of the extent
to which the project's schedule met each best practice.
Table 2: Extent to Which CMRR's Schedule Estimate Met Industry Best
Practices:
Best practice: Capturing all activities;
Overall assessment[A]: Fully met.
Best practice: Sequencing all activities;
Overall assessment[A]: Substantially met.
Best practice: Assigning resources to all activities;
Overall assessment[A]: Substantially met.
Best practice: Establishing the duration of all activities;
Overall assessment[A]: Substantially met.
Best practice: Integrating schedule activities;
Overall assessment[A]: Substantially met.
Best practice: Establishing the critical path for all activities;
Overall assessment[A]: Substantially met.
Best practice: Identifying float between activities;
Overall assessment[A]: Substantially met.
Best practice: Conducting a schedule risk analysis;
Overall assessment[A]: Minimally met.
Best practice: Updating the schedule using logic and durations to
determine dates;
Overall assessment[A]: Fully met.
Source: GAO analysis of CMRR project schedule information.
[A] The ratings we used in this analysis are as follows: "Not met"
means the CMRR provided no evidence that satisfies any part of a
practice. "Minimally met" means the CMRR provided evidence that
satisfies a small portion of a practice. "Partially met" means the
CMRR provided evidence that satisfies about half of a practice.
"Substantially met" means the CMRR provided evidence that satisfies a
large portion of a practice. "Fully met" means the CMRR provided
evidence that completely satisfies a practice.
[End of table]
The CMRR schedule estimate minimally met industry best practices for
conducting a schedule risk analysis. Namely, according to our guide, a
high-quality schedule requires a schedule risk analysis that uses
already identified risks, among other things, to predict the level of
confidence in meeting a project's completion date and the amount of
contingency time needed to cover unexpected delays. CMRR project
officials identified and documented hundreds of risks to the project,
but these risks were not used in preparing a schedule risk analysis.
For example, project officials identified the following three risks
that are likely to occur: (1) a necessary electrical system upgrade
that might not be completed in time for construction activities, (2)
uncertainties associated with the flow of simultaneous design changes,
and (3) noncompliance with certain quality assurance standards for
nuclear facilities. These risks could cause delays, ranging anywhere
from 1 to 5 years. Nevertheless, the project's schedule risk analysis
identified only a 1-year schedule contingency for the entire project.
If NNSA is unable to successfully mitigate these risks and if they
occur together, there is a high likelihood that the 1-year contingency
that NNSA established may be exceeded. As a result, project officials
cannot be certain the schedule estimate contains all identified risks
in its risk analysis. Project officials told us that, before the
project baseline is established, they expect to have a schedule risk
analysis that includes identified risks and that they are in the early
stages of developing a plan to do so.
NNSA is taking steps to mitigate the risks that have been identified
and, because the project is still in early stages, many risks may be
resolved. For example, to mitigate the risk that the electrical system
upgrade would not be completed in time to avoid a delay in
construction activities, project officials have identified specific
steps to help ensure that the upgrade is performed in a timely manner.
However, without a schedule risk analysis that contains risks
identified by CMRR project officials, NNSA cannot be fully confident,
once it decides to resume CMRR construction plans, that sufficient
schedule contingency is established to ensure that the project will be
completed on time and within estimated costs. As a result, overall
project costs could potentially exceed NNSA's April 2010 estimate of
between $3.7 billion and $5.8 billion and NNSA had not yet determined
the impact to the project's costs of its recent decision to defer CMRR
construction for at least 5 years. Appendix III contains additional
information on each practice and our assessment of the estimate
compared to best practices.
NNSA Considered Several Options to Preserve Plutonium-Related Research
Capabilities, but Ultimately Chose to Build a Minimally Sized Facility
at Los Alamos:
To replace the plutonium-related research capabilities in Los Alamos's
deteriorating Chemistry and Metallurgy Research facility, NNSA
considered several options. In the end, NNSA decided to build a
minimally sized CMRR facility at Los Alamos with a broad suite of
capabilities to meet nuclear weapons stockpile needs over the long-
term. These capabilities would also be used to support plutonium-
related research needs of other departmental missions. NNSA evaluated
these options based on their expected effect on cost, schedule, risk,
and ability to meet the plutonium-related research needs of the
nuclear weapons stockpile stewardship program.
NNSA first focused on identifying and replacing the capabilities
necessary to maintain and modernize the nuclear weapons stockpile.
Specifically, these capabilities included those necessary to study the
chemical and metallurgic properties of plutonium pits to ensure that
they are properly produced, certified, and monitored over time so they
remain safe and reliable[Footnote 14]. For example, to ensure that a
nuclear weapon will function as intended, the plutonium inside of the
pits needs to meet strict specifications. Meeting these specifications
requires having the capability to analyze and characterize the
plutonium's chemistry and material properties. The specifications
require NNSA to measure several chemical attributes, including
chemical composition and impurities, as well as the pit's structural
attributes, such as the metal's microscopic grain size, its texture,
any potential defects, and its weld characteristics. NNSA identified
at least 58 distinct capabilities that will be required in the new
facility to allow it to conduct the analyses necessary to build at
least one pit of every type currently in the stockpile.[Footnote 15]
NNSA determined that as many as 79 capabilities may be required if
NNSA needs to manufacture a larger quantity of pits--up to its high
estimate of 80 pits per year, which is the Department of Defense's
published military requirement for pit production. In addition to
research capabilities, NNSA determined that the new facility would
need to provide other capabilities to support research operations. In
particular, long-term plutonium storage space is needed to support
plutonium-related research at CMRR.
To house these needed capabilities, NNSA assessed three potential
sizes for a new facility--22,500 square feet, 31,500 square feet, and
40,500 square feet. The 40,500 square foot option included about
10,500 square feet of unequipped space--known as contingency space--to
allow for program changes, such as increased pit manufacturing. In
addition, this contingency space could accommodate users outside Los
Alamos, such as researchers from Livermore. However, in 2004, NNSA
chose the smallest and least expensive option--22,500 square feet.
NNSA officials told us that cost was the primary driver of this
decision.
NNSA's choice to build a minimally sized facility was questioned in
two studies conducted subsequent to NNSA's decision in 2004.
Specifically, a Los Alamos study conducted in 2006 found that
increasing CMRR's size by 9,000 square feet--to a total of 31,500
square feet--would be the best option based on cost, schedule, risk,
and the facility's ability to meet plutonium-related research needs.
[Footnote 16] Furthermore, a separate independent study prepared for
NNSA in 2006 determined that adding 9,000 square feet to CMRR would
lower risk and increase facility flexibility but could cost an
additional $179 million.[Footnote 17] Nevertheless, NNSA officials
told us that a smaller sized facility had the best chance of
minimizing costs. NNSA officials acknowledge that the smaller size
option poses more risk because the facility will include no
contingency space. This space may be necessary, for example, to
respond to potential increases in pit production needs if in the
future they unexpectedly approach or exceed 80 pits per year. If this
occurs, and no contingency space is available, other plutonium-related
research beyond that required for the nuclear weapons stockpile will
also likely be affected. According to NNSA and Los Alamos officials,
these risks could be mitigated by conducting some nonnuclear weapons
plutonium-related research at other facilities, such as Los Alamos's
PF-4 pit production facility. However, PF-4 also has ongoing
laboratory and storage limitations and may not be able to accommodate
these other nonweapons plutonium activities.
Subsequent to its 2004 decision to build CMRR at Los Alamos, NNSA
continued to study other locations for consolidating plutonium-related
research within the nuclear security enterprise. Specifically, as part
of its development of a complexwide strategy to modernize nuclear
research, development, and production facilities that support the
nuclear weapons stockpile, NNSA studied consolidating the nation's
plutonium-related research capabilities at Los Alamos, the Pantex
Plant in Texas, the Nevada National Security Site in Nevada, the
Savannah River Site in South Carolina, and the Y-12 National Security
Complex in Tennessee. In December 2008, NNSA decided to consolidate
plutonium research at Los Alamos and reaffirmed its earlier 2004
decision to locate the new CMRR at Los Alamos. Consolidating plutonium-
related research capabilities at Los Alamos presented several
advantages, including lower costs and risks when compared to other
locations. For example, colocating plutonium analytical capabilities
with Los Alamos's pit manufacturing capabilities reduced the costs and
risks of protecting plutonium from potential theft. As part of NNSA's
decision to consolidate plutonium research at Los Alamos, NNSA also
decided that the CMRR would be used to support plutonium-related
research needs of other non-weapons activities, including nuclear
nonproliferation activities; homeland security activities, such as
nuclear forensics and nuclear counterterrorism; waste management; and
material recycle and recovery programs. However, the size of the
planned CMRR facility--22,500 square feet--has not changed since
NNSA's initial 2004 decision, which calls into question the facility's
ability to support the needs of these other activities.
CMRR May Meet Nuclear Weapons Stockpile Requirements but May Not
Accommodate Other Plutonium-Related Research Needs:
NNSA's plans to construct the CMRR focused on meeting changing nuclear
weapons stockpile requirements. However, CMRR may not be able to
accommodate all stockpile and other plutonium-related research needs,
particularly as other NNSA facilities reduce or end their plutonium
research activities as a result of broader NNSA plans to consolidate
its plutonium activities.
NNSA's CMRR Plans Focus on Meeting Nuclear Weapons Stockpile
Requirements, But Some Plutonium-Related Work for the Stockpile May
Not Be Accommodated:
NNSA's plans to construct the CMRR primarily focus on maintaining
plutonium-related research capabilities that are necessary for meeting
nuclear weapons stockpile requirements. NNSA designed the CMRR to
support the capabilities necessary for maintaining the safety and
reliability of the nuclear stockpile--namely, the testing,
manufacturing, and certification of the pits--and, in particular,
plutonium-related research capabilities, such as analytical chemistry
and materials characterization, and associated special nuclear
materials vault storage. More specifically, in designing the CMRR,
NNSA analyzed detailed data on past nuclear weapons activities
conducted at Los Alamos, including information on the frequency of
plutonium samples analyzed over time and the expected annual
requirement for manufacturing new pits to determine the plutonium-
related research capabilities the new facility would need to meet NNSA
weapons program requirements. For example, NNSA studied the number of
plutonium samples that had been processed in 2007 at the old Chemistry
and Metallurgy Research facility for analytical chemistry and
materials characterization work and used the number as an average
representation in assuming future workloads. In addition, NNSA
considered the numbers of specific pieces of equipment and the
associated square footage of laboratory space needed to conduct
specific analytical chemistry and material characterization work.
In its planning, NNSA considered how plutonium-related capabilities in
the CMRR could meet changing stockpile requirements, including NNSA's
established upper limit of producing 80 pits per year. NNSA designed
the facility to ensure that it can meet the pit production
requirements regardless of the specific number of pits produced--or,
in other words, the number of pits produced each year will not
significantly affect the capabilities NNSA will need in the new
facility, although capacity limits cap the quantity of new pits at 80
pits per year. For example, NNSA's 2009 CMRR Program Requirements
document states that the new facility will have laboratory spaces
designed in a way that is flexible and modular to accommodate changes
in the mission and the dynamic conditions associated with normal
processing and maintenance activities in a laboratory environment.
NNSA officials indicated that they are confident that the CMRR will
generally meet nuclear weapons activities needs and accommodate
changes in the nuclear weapons stockpile requirements, including the
ability to produce up to 80 pits per year. However, some weapons
activities capabilities that currently exist at other NNSA sites may
no longer be available to the nuclear security enterprise because of
broader NNSA modernization plans to consolidate plutonium activities.
As part of NNSA's plan to consolidate plutonium related work at Los
Alamos, the CMRR was designed to absorb some plutonium-related
research from other facilities as those other facilities reduce or end
their weapons activities work. For example, Livermore's Superblock
facility is equipped with the necessary systems to safely work with
plutonium and to support extending the life of certain warheads in the
nuclear weapons stockpile. Under NNSA's strategy to consolidate
plutonium work at Los Alamos, the majority of Livermore's plutonium is
scheduled to be removed in 2012, and some of this research will be
discontinued at Superblock. NNSA plans to have the CMRR take on much
of this work; however, Livermore officials told us they believe that
NNSA may still lose some plutonium-related capabilities once some
research is discontinued at Superblock. For example, NNSA may face a
gap in the plutonium-related capabilities necessary to help improve
nuclear warhead surety--that is, safety, security, and use control.
NNSA has not planned for another facility to take over this work, and
NNSA officials told us that the CMRR has not been designed to support
this surety research. Furthermore, NNSA and Los Alamos officials told
us that NNSA may also lose some pit testing capabilities that only
take place in the Superblock at Livermore and are expected to be
discontinued there in 2013. Pit testing includes thermal, vibration,
and other environmental tests on pits that ensure that the weapon can
successfully function from the time it is in the stockpile until it is
deployed and reaches a target. Livermore officials told us that CMRR
will not accommodate pit environmental testing because the systems
used to conduct the environmental tests could cause vibrations through
the rest of the facility. This could disrupt other work that requires
precision instrumentation. Livermore officials also told us that these
pit environmental testing capabilities are necessary to help meet
nuclear weapons stockpile requirements. Because the CMRR was not
intended to support all of these capabilities, NNSA will need to find
another location if this plutonium-related work currently being
conducted at Livermore is to be continued. NNSA has begun studying the
extent to which the environmental pit testing capabilities will be
needed, and if so, where they will be located. However, NNSA currently
has no final plans for relocating them elsewhere.[Footnote 18]
CMRR May Not Meet Other Plutonium-Related Research and Storage Needs
As DOE and NNSA Have Not Fully Analyzed Programs Outside of Nuclear
Weapons Stockpile Work:
DOE and NNSA conduct important plutonium-related research in other
mission areas outside of nuclear weapons stockpile work, and it is
unclear whether the CMRR as designed will be large enough to
accommodate these nonweapons activities because they have not
comprehensively studied their long-term research and storage needs. A
NNSA record of decision states that the CMRR will support other
national security missions involving plutonium-related research,
including nonproliferation, nuclear forensics, and nuclear
counterterrorism programs. For example, NNSA plans to use analytical
chemistry capabilities in CMRR to perform nuclear forensics work that
would be needed to, among other things, identify the source of and
individuals responsible for any planned or actual use of a nuclear
device.
However, DOE and NNSA have not comprehensively studied the long-term
plutonium-related research and storage needs of programs outside of
NNSA's nuclear weapons stockpile work and therefore cannot be sure
that the CMRR can accommodate them. In particular, DOE does not have
important information on departmentwide analytical chemistry and
material characterization research and storage needs, which can be
helpful in making fully informed planning decisions about its long-
term infrastructure and consolidation plans for the nuclear security
enterprise. As we have previously reported, conceptual planning for a
building--a process by which an organization's facility needs are
identified and understood--is the critical phase of any successful
building project development.[Footnote 19] This conceptual planning
results in a building design that should be well defined according to
an organization's needs and include input from all key stakeholders
before it is designed. NNSA and Los Alamos officials told us that the
programs supporting mission areas outside of the nuclear stockpile
work--including NNSA's Office of National Technical Nuclear Forensics
and Office of Fissile Materials Disposition--were generally not
involved in planning the CMRR. Los Alamos officials said that they
thought that there was too much time before the new facility would be
operating for other mission areas to know their specific needs.
However, by not including input from all the mission areas during the
design of CMRR, NNSA has risked not knowing all of the potential needs
and uses for the new facility to complement its important missions
outside of the nuclear weapons stockpile work.
NNSA and Los Alamos officials told us they are confident that the CMRR
will be able to support other missions' needs for plutonium-related
research, but the facility's design does not include dedicated space
for other missions' research needs and includes little to no
contingency space. Los Alamos officials told us that shifting nuclear
stockpile requirements and changing pit production rates may impact
specific workloads and space capacity issues but that the CMRR is
still too far from becoming operational to estimate these impacts. For
example, if stockpile requirements are such that the higher boundary
of pit production capacity is needed--up to 80 pits per year--then the
new facility will have little, if any, space to address other
missions' research.[Footnote 20] Moreover, in a 2008 analysis of the
CMRR's design, NNSA stated that Los Alamos is uncertain that it will
be able to conduct all of NNSA's plutonium-related research operations
within the 22,500 square feet of laboratory space in the facility.
NNSA planning documents indicate that CMRR is intended to support
nonweapons activity needs only if additional capacity remains after
all weapons-related activities are supported. If additional capacity
is not available, NNSA may face the prospect of not being able to use
the new facility for one of its intended purposes of supporting
certain plutonium-related research for missions outside of nuclear
weapons stockpile work. A 2004 NNSA study suggested that this could
effectively result in national security, nonproliferation, and
environmental management programs potentially not performing in a cost-
effective, compliant, and timely manner.[Footnote 21]
In addition, the CMRR has been designed to support Los Alamos and
NNSA's mission need to store significant quantities of nuclear
material associated with the plutonium operations in a safe and secure
manner using vault storage. Specifically, NNSA plans to shift all of
Los Alamos' current vault storage materials from its existing
chemistry and metallurgy facility and overflow inventory from the PF-4
facility to the CMRR.[Footnote 22] However, Los Alamos officials told
us that Los Alamos may not have enough storage space even after the
CMRR is complete. NNSA plans to first use the newly available vault
space in the CMRR for short-term, daily storage of nuclear materials
being used for programmatic work and then use any remaining space for
long-term storage. NNSA designed the CMRR without much long-term vault
storage because these materials were initially planned to be shipped
offsite for disposal. However, due to broader departmental challenges
with other NNSA sites receiving materials for disposal, Los Alamos may
not be able to ship its nuclear material off-site. If this is the
case, Los Alamos officials told us that they may have to find
additional long-term vault storage. This could also potentially affect
Los Alamos' ability to receive nuclear materials from other sites
under NNSA's consolidation strategy. In addition, Los Alamos officials
told us that NNSA is still considering facility layout options that
would allow for vault storage space to be configured for other
operations and lab space. If this space is used for functional
laboratory space rather than storage, less space will be available for
short-term vault storage than NNSA originally thought.
Conclusions:
Once NNSA resumes the CMRR project and constructs the facility, CMRR
will play an important role in ensuring the continued safety and
reliability of the U.S. nuclear weapons stockpile. The CMRR can
potentially offer NNSA the opportunity to improve efficiency, save
costs, and reduce safety hazards for workers. Because of the
facility's importance to the stockpile, multibillion dollar price tag,
the inherent challenges in building facilities that can safely and
securely store plutonium, and NNSA's ongoing difficulties managing
large projects, it is critical that NNSA and Congress have accurate
estimates of the project's costs and schedules, particularly when the
CMRR project is resumed. After facing a nearly six-fold increase in
estimated cost and schedule delays, NNSA's most recent cost and
schedule estimates generally meet industry best practices, but there
are important weaknesses that call these estimates' reliability into
question. For example, an independent cost estimate--the most rigorous
method to validate major cost elements that is performed by an entity
that has no stake in the approval of the project--has not yet been
conducted. To its credit, NNSA plans to have an independent cost
estimate conducted prior to the completion of CMRR's project baseline
once the project is resumed. With regard to the project's schedule
estimate, however, NNSA cannot yet provide high assurance that all
project risks are fully accounted for in the project's schedule risk
analysis that is used for updating the project's schedule contingency
estimates. As a result, NNSA cannot yet be fully confident that, once
it decides to resume the CMRR project, the project will meet its
estimated completion date, which could lead to further delays and
additional costs.
However, reliable cost and schedule estimates for CMRR that fully meet
industry best practices are of little use if DOE's and NNSA's mission
needs are not met. Constructing CMRR is an important part of NNSA's
strategy to modernize its nuclear weapons facilities into a smaller
and more responsive, efficient, and secure infrastructure to meet the
changing requirements of the nuclear weapons stockpile. The CMRR was
intended to support the plutonium-related research and storage needs
of other DOE and NNSA national security missions and activities
outside of the nuclear weapons stockpile work, including homeland
security and nuclear nonproliferation activities; but because NNSA
decided early in the project to reduce the size of the proposed
facility to save money, CMRR may now lack the ability to accommodate
these other research needs. In particular, the planned removal of most
plutonium from Livermore presents NNSA with a dilemma in that the
primary benefit of consolidating plutonium at Los Alamos--lower
security costs--may be offset by the need to replace Lawrence
Livermore National Laboratory's plutonium research, storage, and
environmental testing capabilities. Importantly, when NNSA decided to
consolidate plutonium operations at Los Alamos, it did not fully
consider whether planned or existing facilities at Los Alamos would be
capable of continuing plutonium work being conducted elsewhere. For
example, CMRR was not intended to accommodate the thermal, vibration,
and other environmental pit testing that Livermore currently conducts
because the vibrations this type of testing creates could disrupt
other work at CMRR that requires precision instrumentation.
Nevertheless, this type of testing is necessary to meet nuclear
weapons stockpile requirements and so must be conducted somewhere. The
full extent of the potential shortfall in plutonium research
capabilities is not well-understood because DOE and NNSA have not
comprehensively assessed their plutonium-related research, storage,
and environmental testing needs. Plutonium research for the nuclear
weapons stockpile and for other missions may have to compete for
limited laboratory and storage space in CMRR and other facilities at
Los Alamos, especially if the demand for newly manufactured pits
unexpectedly increases. As a result, expansion of CMRR or construction
of costly additional plutonium research, storage, and testing
facilities at Los Alamos or elsewhere may be needed sometime in the
future.
Recommendations for Executive Action:
To strengthen cost and schedule estimates for the CMRR and ensure
needed plutonium research needs are sufficiently accommodated, we
recommend that the Secretary of Energy take the following three actions:
1. Once NNSA resumes the CMRR project and prior to establishing a new
cost and schedule baseline, incorporate all key risks identified by
CMRR project officials into the project's schedule risk analysis, and
ensure that this information is then used to update schedule
contingency estimates, as appropriate.
2. Conduct a comprehensive assessment of needed plutonium-related
research, storage, and environmental testing needs for nuclear weapons
stockpile activities as well as other missions currently conducted at
other NNSA and DOE facilities, with particular emphasis on mitigating
the consequences associated with eliminating plutonium research,
storage, and environmental testing capabilities from NNSA's Lawrence
Livermore National Laboratory.
3. Using the results of this assessment, report to Congress detailing
any modifications to existing or planned facilities or any new
facilities that will be needed to support plutonium-related research,
storage, and environmental testing needs for nuclear weapons stockpile
activities as well as other missions conducted by NNSA and DOE.
Agency Comments and Our Evaluation:
We provided NNSA with a draft of this report for its review and
comment. In its written comments, reproduced in appendix IV, NNSA
generally agreed with our recommendations to conduct a comprehensive
assessment of needed plutonium-related research, storage, and
environmental testing needs and to report to Congress on any
modifications to existing or planned facilities or any new facilities
that will be needed to support these needs. However, NNSA disagreed
with our recommendation to incorporate all key risks identified by
project officials into the project's schedule risk analysis.
Specifically, NNSA stated that, subsequent to receiving our draft
report for its comments, the President's budget request for fiscal
year 2013 was released and resulted in several changes to the funding
and execution of the CMRR project. In particular, construction of the
CMRR is now to be deferred for at least 5 years. Therefore, NNSA
stated that it is conducting additional analysis to determine the most
effective way to provide analytical chemistry, materials
characterization, and storage capabilities that were originally
intended for the CMRR through the use of existing infrastructure. As
part of this analysis, NNSA stated that it will evaluate options to
use existing facilities at other sites. We believe this is consistent
with our recommendation that NNSA conduct a comprehensive assessment
of needed plutonium-related research, storage, and environmental
testing needs and that NNSA's decision to defer construction of the
CMRR will give it sufficient time to conduct this assessment.
NNSA also commented that it will continue to work with Congress and
other stakeholders as it adjusts its plutonium strategy. In our view,
this is also consistent with our recommendation to report to Congress
on any modifications to existing or planned facilities or any new
facilities that will be needed to support plutonium-related research,
storage, and environmental testing needs for nuclear weapons stockpile
activities as well as other missions conducted by NNSA and DOE.
With regard to our recommendation to incorporate all key risks
identified by CMRR project officials into the project's schedule risk
analysis, NNSA commented that spending project money to update the
CMRR project's schedule would not be prudent because of the
construction delay. Therefore, NNSA disagreed with the recommendation.
NNSA stated that its efforts in the near term would be focused on
closing out the current design and that any future efforts will
require updated cost and schedule estimates. We agree with NNSA that
it is not necessary to update the project's schedule at this time
because of the recently announced construction delay; however, we
maintain that it is important that all project risks are fully
accounted for in the CMRR's schedule once the project is resumed.
Therefore, we clarified our recommendation to specify that NNSA should
take action to ensure that the CMRR's schedule risk analysis is
appropriately revised to account for all project risks when NNSA
resumes the project and before it establishes a new cost and schedule
baseline.
We are sending copies of this report to the Secretary of Energy; the
Administrator of NNSA; the Director, Office of Management and Budget;
the appropriate congressional committees; and other interested
parties. In addition, the report is available at no charge on the GAO
website at [hyperlink, http://www.gao.gov].
If you or your staffs have any questions about this report, please
contact me at (202) 512-3841 or aloisee@gao.gov. Contact points for
our Offices of Congressional Relations and Public Affairs may be found
on the last page of this report. GAO staff who made major
contributions to this report are listed in appendix V.
Signed by:
Gene Aloise:
Director, Natural Resources and Environment:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
Our objectives were to examine (1) changes in the cost and schedule
estimates for the construction of the facility and the extent to which
its most recent estimates reflect best practices, (2) options the
National Nuclear Security Administration (NNSA) considered to ensure
that plutonium-related research activities could continue as needed,
and (3) the extent to which NNSA's plans to construct the Chemistry
and Metallurgy Research Replacement Nuclear Facility (CMRR) and its
consideration of options reflected changes in nuclear weapons
stockpile requirements and other plutonium-related research needs.
To examine the project's cost and schedule estimates and the extent to
which its current estimates reflect best practices, we reviewed
relevant NNSA documents and met with agency and contractor officials
on the changes that have occurred to date and the reasons for them. We
compared NNSA's most recent detailed cost and schedule estimates with
industry best practices contained in our cost estimating and
assessment guide and discussed them with project officials to give
them the opportunity to provide feedback on our assessment. Our review
examined specifically those NNSA cost estimates that were prepared in
April 2010 and schedule estimates, which at the time of our review
were updated as of May 2011 or more recent for some portions of the
schedule. As such, the cost and schedule estimates we reviewed do not
reflect NNSA's 5-year construction deferral recently announced in
February 2012 and NNSA has not yet determined the potential long-term
cost impact of this delay.
To examine the options NNSA considered to continue plutonium-related
analytical work, we reviewed NNSA and contractor documents on
plutonium research needs and the various options available to meet
those needs. We also met with NNSA and contractor officials to better
understand how these options were analyzed to determine the best
approach to fulfill NNSA's mission. While NNSA evaluated options on
how to best meet its mission needs, it may have also evaluated
alternatives based on the environmental impact of building the CMRR.
As such, our review examined the options NNSA assessed to maintain the
capabilities for plutonium-related analytical chemistry, material
characterization, and storage and did not address NNSA's compliance
with requirements of the National Environmental Policy Act. We also
met with NNSA and contractor officials to gain a better understanding
of how these options were analyzed to determine the best approach to
fulfill NNSA's mission.
To determine the extent to which NNSA's plans reflect changes in
nuclear weapons stockpile requirements, we reviewed NNSA analyses that
were used to support CMRR project decisions and met with NNSA
officials to determine if these analyses were comprehensive and
reflected up-to-date nuclear weapons stockpile requirements. We also
visited Los Alamos and Lawrence Livermore National Laboratories. To
ensure the data we used were sufficiently reliable, we compared
information gathered from a variety of data sources. For example, we
interviewed officials from both Los Alamos and Lawrence Livermore
National Laboratories to obtain separate and independent perspectives
on CMRR project plans. We determined the data were sufficiently
reliable for our purposes.
We conducted this performance audit from February 2011 through
February 2012 in accordance with generally accepted government
auditing standards. Those standards require that we plan and perform
the audit to obtain sufficient, appropriate evidence to provide a
reasonable basis for our findings and conclusions based on our audit
objectives. We believe that the evidence obtained provides a
reasonable basis for our findings and conclusions based on our audit
objectives.
[End of section]
Appendix II: Summary Assessment of CMRR's Cost Estimate Compared to
Industry Best Practices:
Best practice characteristic: Comprehensive;
Overall assessment[A]: Substantially met;
Detailed best practice: The cost estimate includes all life cycle
costs;
Detailed assessment[A]: Substantially met. The total project cost for
the construction of the Nuclear Facility is $4.2 billion. Government
and contractor costs are included. However, operations and retirement
costs are not included. These costs were not included because there
was no mandate to estimate them. The cost estimate spans from start of
construction in June 2010 to completion in 2020 with a schedule
contingency through 2022.
Best practice characteristic: Comprehensive;
Overall assessment[A]: Substantially met;
Detailed best practice: The cost estimate completely defines the
program, reflects the current schedule, and is technically reasonable;
Detailed assessment[A]: Fully met. Technical descriptions were
provided in multiple documents such as the "CMRR Nuclear Facility (NF)
Estimate at Complete Forecast-April 2010," the Los Alamos CMRR Mission
Need Statement, the Program Requirements Documents, the WBS
dictionary, and the "Final Environmental Impact Statement for the
Chemistry and Metallurgy Project."
Best practice characteristic: Comprehensive;
Overall assessment[A]: Substantially met;
Detailed best practice: The cost estimate work breakdown structure is
product-oriented, traceable to the statement of work/objective, and at
an appropriate level of detail to ensure that cost elements are
neither omitted nor double-counted;
Detailed assessment[A]: Partially met. The work breakdown structure
and work breakdown structure dictionary are product oriented and the
work breakdown structure flows down to level 4 of the program,
project, or task. A statement of work was provided in the form of a
mission need statement; however, it is not easily reconciled with the
work breakdown structure dictionary.
Best practice characteristic: Comprehensive;
Overall assessment[A]: Substantially met;
Detailed best practice: The estimate documents all cost-influencing
ground rules and assumptions;
Detailed assessment[A]: Fully met. Cost influencing ground rules and
assumptions can be found in the CMRR Estimate Update Execution Plan.
Budget constraints and escalation are addressed. A list of high-level
risk drivers along with the handling costs and risk input information
was provided. Exclusions to the cost estimate are noted in the
documents.
Best practice characteristic: Well documented;
Overall assessment[A]: Substantially met;
Detailed best practice: The documentation captures the source data
used, the reliability of the data, and how the data were normalized;
Detailed assessment[A]: Partially met. The data was analyzed and high-
level cost drivers have been addressed as well as unit rates and
quantities. Source data used to develop the estimate were found. The
cost estimate was based on historical data from other Department of
Energy (DOE) sites and the data was normalized. However, the
independent review team found inconsistencies and discrepancies of
quantities (hours) and costs. In addition, the review team reported
that even though the basis of estimate referred to current contract
awards or proposals, no reference was made to specific contracts or
proposals by date and number.
Best practice characteristic: Well documented;
Overall assessment[A]: Substantially met;
Detailed best practice: The documentation describes in sufficient
detail the calculations performed and the estimating methodology used
to derive each element's cost;
Detailed assessment[A]: Substantially met. While not explicitly
stating what methodology was used, the pricing approach summary
indicates that the estimate was developed using a combination of the
build-up method and extrapolation from pricing information and
productivity rates from other DOE sites. However the calculations
involved were not clearly shown.
Best practice characteristic: Well documented;
Overall assessment[A]: Substantially met;
Detailed best practice: The documentation describes, step by step, how
the estimate was developed so that a cost analyst unfamiliar with the
program could understand what was done and replicate it;
Detailed assessment[A]: Substantially met. The documentation for the
estimate contains a summary narrative about the project as well as
high-level cost summaries. The documentation discusses risk and
contingency reserve. However, it does not address sensitivity although
a sensitivity analysis was performed. Narrative on how the sensitivity
analysis was conducted was not provided.
Best practice characteristic: Well documented;
Overall assessment[A]: Substantially met;
Detailed best practice: The documentation discusses the technical
baseline description and the data in the baseline is consistent with
the estimate;
Detailed assessment[A]:Substantially met. There are technical
descriptions discussed in the documentation that are consistent with
the basis of estimate and the work outlined in the detail cost
estimate spreadsheets. However, we are unable to map specific
technical descriptions as outlined in the requirements document to
cost elements in the high-level or detailed cost estimates. During the
site visit, project officials showed us how the scope of work in the
work breakdown structure dictionary was written in a way to illustrate
how the scope of work was captured.
Best practice characteristic: Well documented;
Overall assessment[A]: Substantially met;
Detailed best practice: The documentation provides evidence that the
cost estimate was reviewed and accepted by management;
Detailed assessment[A]: Partially met. Los Alamos policy states that
reviews shall be performed. According to project officials, these
reviews typically include an integrated project team review,
functional manager review, directorate review, and in the case of
projects of high complexity or risk, an external corporate review
and/or DOE Los Alamos Site Office review. A CMRR functional review was
held March 12, 2010, and the review of the current estimate was listed
on the meeting agenda. However, without further documentation we are
unable to determine whether or not a briefing was given to management
that clearly explains the detail of the cost estimate--including
presentation of lifecycle costs, ground rules and assumptions,
estimating methods and data sources as they relate to each work
breakdown structure element, results of sensitivity analysis, risk and
uncertainty analysis, and if a desired level of confidence was
reached. Additionally, it is not clear that an affordability analysis,
contingency reserve, conclusions, or recommendations were discussed
with management. The documentation also does not show management's
acceptance of the cost estimate.
Best practice characteristic: Accurate;
Overall assessment[A]: Substantially met;
Detailed best practice: The cost estimate results are unbiased, not
overly conservative or optimistic, and based on an assessment of most
likely costs;
Detailed assessment[A]: Substantially met. Risk and uncertainty
analyses were performed providing an 84 percent confidence level.
There are three components that contribute to the total contingency
value established for the project--schedule, estimate, and technical
and programmatic risk analysis.
Best practice characteristic: Accurate;
Overall assessment[A]: Substantially met;
Detailed best practice: The estimate has been adjusted properly for
inflation;
Detailed assessment[A]: Substantially met. The documentation contained
information on escalation rates. However, it is unclear how the cost
estimate data were normalized. For example, costs are listed but are
not labeled as constant or then-year dollars. Detailed calculations on
how escalation was applied to the cost estimate are not documented.
Best practice characteristic: Accurate;
Overall assessment[A]: Substantially met;
Detailed best practice: The estimate contains few, if any, minor
mistakes;
Detailed assessment[A]: Substantially met. The numbers shown in the
estimate at complete document and the cost estimate spreadsheet are
accurate and the independent review team found only one minor mistake
in their review of the estimate. However, we were not provided access
to the detailed calculations behind the spreadsheet to check that the
estimate was calculated correctly.
Best practice characteristic: Accurate;
Overall assessment[A]: Substantially met;
Detailed best practice: The cost estimate is regularly updated to
reflect significant changes in the program so that it always reflects
current status;
Detailed assessment[A]: Substantially met. The CMRR Project Control
Plan outlines a formal change control process that is to be executed
in accordance with the Los Alamos Project Management and Site Services
Directorate as well as the CMRR Baseline Change Control Board. These
documents provide an approach to document, communicate, and approve
potential changes to scope, cost, and schedule, and they provide the
basis for incorporating changes into the project baseline and/or the
forecast estimate at completion. These documents also describe the
activities and responsibilities for making changes to the baseline.
Best practice characteristic: Accurate;
Overall assessment[A]: Substantially met;
Detailed best practice: Any variances between planned and actual costs
are documented, explained, and reviewed;
Detailed assessment[A]: Substantially met. Earned value is entered for
each work package based on the earned value method indicated for that
work package. Progress is reported in terms of percent complete by
work package and is verified, analyzed, and reported to the project
controls team. This information is then analyzed by the project
controls team and control account managers and reviewed with CMRR
management as the final reports are completed and published. However,
there is no evidence of the cost estimate being updated to capture
variances from the earned value system.
Best practice characteristic: Accurate;
Overall assessment[A]: Substantially met;
Detailed best practice: The estimate is based on a historical record
of cost estimating and actual experiences from other comparable
programs;
Detailed assessment[A]: Substantially met. Part of the estimate was
developed using the engineering build up method which includes
historical data from other DOE/NNSA sites (Waste Treatment Plant,
Mixed Oxide Fuel Fabrication Facility, and two chemical
demilitarization facilities). The reliability of the data is
documented where confidence levels associated with quantity,
productivity, labor, and nonlabor pricing are addressed. However, for
some of the data, the sources were not provided and there was no
evidence that earned value data was used to develop or update the
estimate.
Best practice characteristic: Credible;
Overall assessment[A]: Partially met;
Detailed best practice: The cost estimate includes a sensitivity
analysis--a technique that identifies a range of possible costs based
on varying major assumptions, parameters, and data inputs;
Detailed assessment[A]: Substantially met. CMRR conducted some sort of
sensitivity analysis. No documentation was given providing a narrative
on how the sensitivity analysis was conducted--including whether high
percentages of cost were determined and how their parameters and
assumptions were examined. Additionally, it cannot be determined
whether the outcomes were evaluated for parameters most sensitive to
change or how this analysis was applied to the estimate. However,
during a site visit, Los Alamos officials provided a copy of a report
that shows how a sensitivity analysis was applied to the nuclear
facility cost estimate. For this assessment, a high and low range was
determined. Some of the factors that were varied included overhead and
General and Administrative rates, and escalation.
Best practice characteristic: Credible;
Overall assessment[A]: Partially met;
Detailed best practice: A risk and uncertainty analysis was conducted
that quantified the imperfectly understood risks and identified the
effects of changing key cost driver assumptions and factors;
Detailed assessment[A]: Substantially met. The cost estimate includes
contingency costs for schedule ($99 million), cost estimate ($508
million) and technical and programmatic risks ($404 million). While a
schedule risk analysis was performed that identified $99 million in
schedule contingency, it is not clear how this analysis was done as no
supporting documentation was provided. An independent review team
assessed the schedule risk analysis and found that the risk model did
not contain enough detail to allow specific risk events to be
associated with the schedule activities they affect. Documentation
supporting the cost estimate ($508 million) risk and uncertainty
analysis was conducted via a Monte Carlo simulation which established
an 84 percent confidence level for cost estimate uncertainty. The
process by which this analysis was done is well documented and
includes the contingency level range results. However, this risk and
uncertainty analysis only reviewed classic cost estimate contingency
and did not assess technical, programmatic or schedule risks. In
addition, the independent review team found that the cost risk
uncertainty analysis was done at a summary level so it does not fully
reflect the uncertainty of the design costs associated with
uncertainty related to quantities or prices listed.
Best practice characteristic: Credible;
Overall assessment[A]: Partially met;
Detailed best practice: Major cost elements were crossed checked to
see whether results were similar;
Detailed assessment[A]: Partially met. Documentation was provided that
shows comparison of selected CMRR cost elements against cost estimates
of other sites.
Best practice characteristic: Credible;
Overall assessment[A]: Partially met;
Detailed best practice: An independent cost estimate was conducted by
a group outside the acquiring organization to determine whether other
estimating methods produce similar results;
Detailed assessment[A]: Partially met. An independent cost estimate
was not conducted by a group outside of the acquiring organization.
However, an independent cost review was performed by the U.S. Army
Corps of Engineers in conjunction with an experienced contractor. This
independent cost review resulted in the identification of key findings
which require a Corrective Action Plan. The independent cost review
focused on engineering design, and nuclear facility special facility
equipment engineering design. The independent cost review team had 24
key findings and recommendations.
Source: GAO analysis of CMRR project cost information.
[A] The ratings we used in this analysis are as follows: "Not met"
means the CMRR provided no evidence that satisfies any of the
practice. "Minimally met" means the CMRR provided evidence that
satisfies a small portion of the practice. "Partially met" means the
CMRR provided evidence that satisfies about half of the practice.
"Substantially met" means the CMRR provided evidence that satisfies a
large portion of the practice. "Fully met" means the CMRR provided
evidence that completely satisfies the practice.
[End of table]
[End of section]
Appendix III: Summary Assessment of CMRR's Schedule Estimate Compared
to Industry Best Practices:
Best practice: Capturing all activities;
Explanation: The schedule should reflect all activities as defined in
the program's work breakdown structure, to include activities to be
performed by both the government and its contractors;
Detailed assessment[A]: Fully met. The schedule integrates all of the
effort of NNSA, its contractor, and its major subcontractors.
Best practice: Sequencing all activities;
Explanation: The schedule should be planned so that it can meet
critical program dates. To meet this objective, key activities need to
be logically sequenced in the order that they are to be carried out.
In particular, activities that must finish before the start of other
activities (i.e., predecessor activities) as well as activities that
cannot begin until other activities are completed (i.e., successor
activities) should be identified. By doing so, interdependencies among
activities that collectively lead to the accomplishment of events or
milestones can be established and used as a basis for guiding work and
measuring progress;
Detailed assessment[A]: Substantially met. While we found that about
16 percent of the activities were missing predecessors and successors,
or had constraints, lags, and leads, the majority (84 percent) of the
activities were logically sequenced. There are more than 2,400
activities (5 percent) with missing or dangling predecessors or
successors. There are summary tasks linked with logic (3 percent), but
we have determined that they do not affect the credibility of the
schedule. There are 123 activities (less than 1 percent) with start-to-
finish logic. There are 460 activities (less than 1 percent) that have
10 predecessors or more. There are 590 activities (1 percent)
scheduled with constraints, in addition to or substituting for
complete logic.
Best practice: Assigning resources to all activities;
Explanation: The schedule should reflect what resources (i.e., labor,
material, and overhead) are needed to do the work, whether all
required resources will be available when they are needed, and whether
any funding or time constraints exist;
Detailed assessment[A]: Substantially met. Not all activities in the
project schedule are resource loaded--only 3,757 activities (8
percent) out of the 45,429 activities with positive remaining duration
have resources assigned in the schedule we received. However, there is
credible evidence that the program and Los Alamos manage resources in
various ways outside the project schedule and that their resource
solutions are fed back to the project schedule so that it is feasible
given resource limits.
Best practice: Establishing the duration of all activities;
Explanation: The schedule should realistically reflect how long each
activity will take to execute. In determining the duration of each
activity, the same rationale, data, and assumptions used for cost
estimating should be used. Further, these durations should be as short
as possible and they should have specific start and end dates.
Excessively long periods needed to execute an activity should prompt
further decomposition of the activity so that shorter execution
durations will result;
Detailed assessment[A]: Substantially met. There are 1,642 activities
(4 percent) with durations 44 days or greater, which means that the
majority of the activities (96 percent) have activities that are of
short duration. Contributing to this is the rolling wave approach to
the schedule, where the near-term activities are detailed while
activities further in the future are left in large planning packages
until they become near-term, at which point they are broken down into
their component activities.
Best practice: Integrating schedule activities horizontally;
Explanation: The schedule should be horizontally integrated, meaning
that it should link the products and outcomes associated with already
sequenced activities. These links are commonly referred to as handoffs
and serve to verify that activities are arranged in the right order to
achieve aggregated products or outcomes. The schedule should also be
vertically integrated, meaning that traceability exists among varying
levels of activities and supporting tasks and subtasks. Such mapping
or alignment among levels enables different groups to work to the same
master schedule;
Detailed assessment[A]: Substantially met. As discussed previously in
the "sequencing all activities," there are activities missing
predecessor and successor logic as well as the presence of
constraints, lags, and leads that call into question the adequacy of
horizontal traceability. Vertical traceability was confirmed. The
schedule hierarchy includes five levels, increasing in detail and
specificity from top to bottom.
Best practice: Establishing the critical path for all activities;
Explanation: Using scheduling software, the critical path--the longest
duration path through the sequenced list of key activities--should be
identified. The establishment of a program's critical path is
necessary for examining the effects of any activity slipping along
this path. Potential problems that may occur on or near the critical
path should also be identified and reflected in the scheduling of the
time for high-risk activities;
Detailed assessment[A]: Substantially met. This schedule's critical
path has 5,479 activities with zero or negative total float. There are
so many critical activities because of a number of constraints on
intermediate milestones which is causing negative float on paths to
those activities. However, these activities do not all drive the final
delivery. Los Alamos officials said that when they baseline the
schedule, they plan to remove many of the constraints that are causing
negative float. Many of these constraints are there to enable Los
Alamos to monitor status of intermediate milestones.
Best practice: Identifying float between activities;
Explanation: The schedule should identify float so that schedule
flexibility can be determined. As a general rule, activities along the
critical path typically have the least amount of float;
Detailed assessment[A]: Substantially met. Of the remaining
activities, 22 percent have unexplained large positive and large
negative total float values. Even with agency review, these were
present in the schedule. The total float values in many cases are
several years long. There are 4,611 activities (10 percent) that have
total float over 1,000 days or about 3.8 years. These high total float
values are likely related to the incomplete logic described in the
"sequencing all activities" best practice.
Best practice: Conducting a schedule risk analysis;
Explanation: A schedule risk analysis should be performed using a
schedule built using a good critical path method and data about
project schedule risks, as well as statistical analysis techniques
(such as Monte Carlo) to predict the level of confidence in meeting a
program's completion date. This analysis focuses not only on critical
path activities but also on activities near the critical path, since
they can potentially affect program status;
Detailed assessment[A]: Minimally met. There is no evidence that a
risk analysis has been conducted on this schedule or any summary
schedule derived from this schedule. Los Alamos officials said that
they have conducted a risk analysis using Monte Carlo simulation based
on a prior and more concise schedule a full year before the version we
reviewed was developed. The version we reviewed contained 90,000
activities and was developed in the Spring of 2010--a full year after
Los Alamos conducted its risk analysis and Monte Carlo simulation. Los
Alamos did not conduct a risk analysis on this more recent schedule,
nor did it prepare and simulate a summary schedule based on this more
recent schedule. The summary schedule that Los Alamos simulated was
based on critical and near critical paths. This schedule comprised the
main, secondary and tertiary critical paths. As a result, we believe
that the schedule did not cover the entire work of the project, and
therefore may have excluded some activities or paths that have risk
sufficient to affect the finish date. Instead, Los Alamos selected
about 2,100 activities based on total float, but this practice is
risky because they may not have included all of the activities that
risks in the risk register may affect.
Best practice: Using logic and durations to determine the start and
completion dates;
Explanation: The schedule should use logic and durations in order to
reflect realistic start and completion dates for program activities.
The schedule should be continually monitored to determine when
forecasted completion dates differ from the planned dates, which can
be used to determine whether schedule variances will affect downstream
work. Maintaining the integrity of the schedule logic is not only
necessary to reflect true status, but is also required before
conducting a schedule risk analysis;
Detailed assessment[A]: Fully met. The CMRR schedule is updated at
least monthly, although much of it is updated weekly. The schedule
integrity is checked after each update and metrics are compiled on
problems to determine if the schedule's integrity is improving with
each update. There are no activities in the past that lack the
designation of actual start or actual finish. There are some
activities on or after the data date that have actual start or finish
designations, but that may be because there are 15 schedules combined
in the Integrated Master Schedule and some were updated somewhat after
May 9, 2011.
Source: GAO analysis of CMRR project schedule information.
[A] The ratings we used in this analysis are as follows: "Not met"
means the CMRR provided no evidence that satisfies any part of the
practice. "Minimally met" means the CMRR provided evidence that
satisfies a small portion of the practice. "Partially met" means the
CMRR provided evidence that satisfies about half of the practice.
"Substantially met" means the CMRR provided evidence that satisfies a
large portion of the practice. "Fully met" means the CMRR provided
evidence that completely satisfies the practice.
[End of table]
[End of section]
Appendix IV: Comments from the National Nuclear Security Administration:
Department of Energy:
National Nuclear Security Administration:
Washington, DC 20585:
February 24, 2012:
Mr. Gene Aloise:
Director:
Natural Resources and Environment:
Government Accountability Office:
Washington, DC 20548:
Dear Mr. Aloise:
The National Nuclear Security Administration (NNSA) appreciates the
opportunity to review the Government Accountability Office's (GAO)
draft report, GA0-12-337, Modernizing The Nuclear Security Enterprise:
New Plutonium Research Facility at Los Alamos May Not Meet Al Mission
Needs.
Subsequent to issuance of the draft report for comment, the Presidents
Budget Request for Fiscal Year (FY) 2013 was released and provides
several changes to the funding and execution of the Chemistry and
Metallurgy Research Replacement (CMRR) project that supersede the
recommendations contained in the GAO's Draft Report. Specifically, in
FY 2013, no funding is provided for the CMRR project and construction
of the CMRR Nuclear Facility (NF) is deferred for at least Five years.
As part of the decision to defer construction of the NF, the NNSA is
adjusting its plutonium strategy and developing plans to close out
current design efforts for the NF. While details of both efforts will
be developed in the next 60 days, the impacts to the recommendations
in the GAO report are clear.
I have enclosed a summary of our initial response to address the three
recommendations noted in the report.
If you have any questions related to this response, please contact
Dean Childs, Director, Internal Control at (301) 903-1341.
Sincerely,
Signed by:
Cynthia A. Lersten:
Acting Associate Administrator for Management and Budget:
Enclosure:
[End of letter]
National Nuclear Security Administration Comments on GAO Draft Report,
GAO-12-337, "Modernizing The Nuclear Security Enterprise: New
Plutonium Research Facility at Los Alamos May Not Meet All Mission
Needs"
Initial Response to Report Recommendations:
Recommendation 1:
Incorporate all key risks identified by CMRR project officials into
the project's schedule risk analysis and ensure that this information
is then used to update schedule contingency estimates, as appropriate.
Nonconcur.
NNSA disagrees with this recommendation. Given changes to the CMRR-NF
execution strategy resulting from the FY2013 Budget Request, it would
not be prudent to spend project money to update the project's schedule
when construction of the NF is deferred for at least five years. Near
term design efforts will focus on closing out the current design; any
future efforts will require updated cost and schedule estimates.
Recommendation 2:
Conduct a comprehensive assessment of needed plutonium-related
research, storage, and environmental testing needs for nuclear weapons
stockpile activities as well as other missions currently conducted at
other NNSA and DOE facilities. with particular emphasis on mitigating
the consequences associated with eliminating plutonium research,
storage and environmental testing capabilities from NNSA's Lawrence
Livermore National Laboratory.
Concur in Principle.
NNSA agrees in principle with this recommendation. Consistent with the
FY20 Budget request, NNSA is conducting additional analysis to
determine the most effective way to provide analytical chemistry,
materials characterization and storage capabilities originally
slated for the CMRR-NF through the use of existing infrastructure. As
part of this analysis, NNSA will evaluate options to use existing
facilities at other sites. NNSA remains committed to ensuring
continuity of required plutonium capability and mission functions.
Before proceeding with interim measures in lieu of CMRR-NF, NNSA must
ensure it has adequate National Environment Policy Act Coverage.
Recommendation 3:
Using the results of this assessment, report to the Congress detailing
any modifications to existing or planned facilities or any new
facilities that will be needed to support plutonium-related research,
storage, and environmental testing needs for nuclear weapons stockpile
activities as well as other missions conducted by NNSA and DOE.
Concur in Principle.
NNSA agrees in principle with this recommendation. As NNSA adjusts its
plutonium strategy, as discussed above, it will continue to interface
with Congress and other stakeholders to keep them informed of future
programmatic decisions.
[End of section]
Appendix V: GAO Contact and Staff Acknowledgments:
GAO Contact:
Gene Aloise, (202) 512-3841 or aloisee@gao.gov:
Acknowledgments:
In addition to the contact named above, Ryan T. Coles, Assistant
Director; John Bauckman; Jennifer Echard; Eugene Gray; David T.
Hulett; Jonathan Kucskar; Alison O'Neill; Christopher Pacheco; Tim
Persons; Karen Richey; Stacey Steele; Vasiliki Theodoropoulos; and
Mary Welch made key contributions to this report.
[End of section]
Footnotes:
[1] NNSA was created by the National Defense Authorization Act for
Fiscal Year 2000, Pub. L. No. 106-65 (1999). It is a separate,
semiautonomous agency within the Department of Energy, with
responsibility for the nation's nuclear weapons, nonproliferation, and
naval reactors programs.
[2] For the purposes of this report, CMRR refers to the design and
construction of the nuclear facility portion of NNSA's CMRR project.
The scope of this report does not include the first phase of the
project--the Radiological Laboratory, Utility, and Office Building--
which is much smaller in scope and cost and is substantially complete.
[3] GAO, Nuclear Weapons: National Nuclear Security Administration's
Plans for Its Uranium Processing Facility Should Better Reflect
Funding Estimates and Technology Readiness, [hyperlink,
http://www.gao.gov/products/GAO-11-103] (Washington, D.C.: Nov. 19,
2010); GAO, Department of Energy: Actions Needed to Develop High-
Quality Cost Estimates for Construction and Environmental Cleanup
Projects, [hyperlink, http://www.gao.gov/products/GAO-10-199]
(Washington, D.C.: Jan. 14, 2010); GAO, Nuclear Weapons: National
Nuclear Security Administration Needs To Better Manage Risks
Associated with the Modernization of Its Kansas City Plant,
[hyperlink, http://www.gao.gov/products/GAO-10-115] (Washington, D.C.:
Oct. 23, 2009): GAO, Nuclear Waste: Uncertainties and Questions about
Costs and Risks Persist with DOE's Tank Waste Cleanup Strategy at
Hanford, [hyperlink, http://www.gao.gov/products/GAO-09-913]
(Washington, D.C.: Sept. 30, 2009); and GAO, Department of Energy:
Contract and Project Management Concerns at the National Nuclear
Security Administration and Office of Environmental Management,
[hyperlink, http://www.gao.gov/products/GAO-09-406T] (Washington,
D.C.: Mar. 4, 2009).
[4] GAO, High-Risk Series: An Update, [hyperlink,
http://www.gao.gov/products/GAO-11-278] (Washington, D.C.: Feb. 16,
2011).
[5] GAO, GAO Cost Estimating and Assessment Guide: Best Practices for
Developing and Managing Capital Program Costs, [hyperlink,
http://www.gao.gov/products/GAO-09-3SP] (Washington, D.C.: March 2009).
[6] Department of Defense, Nuclear Posture Review Report, (Washington,
D.C.: April 2010).
[7] In 2004, NNSA determined that it needed a nuclear facility to
relocate certain analytical capabilities from existing facilities at
Los Alamos, which are near end-of-life, as part of NNSA's plans for
maintaining and certifying the nation's nuclear weapons stockpile. In
deciding whether to build a new facility or instead use or refurbish
other existing facilities, a 2006 Los Alamos study determined that a
new nuclear facility should be built because the fundamental
objectives of NNSA's strategic planning for the nuclear weapons
complex could not be achieved without it.
[8] In the context of our cost guide, a cost estimate is the summation
of individual cost elements, using established methods and valid data,
to estimate the future costs of a project, based on what is known today.
[9] [hyperlink, http://www.gao.gov/products/GAO-09-3SP].
[10] DOE, Performance Baseline Guide, DOE G 413.3-5A (Washington,
D.C.: Sept. 23, 2011). Although there is not a one-to-one correlation,
many of the GAO-identified best practices, are also suggested schedule
development practices in DOE's Performance Baseline Guide. DOE also
requires that NNSA establish a project performance baseline to
document estimated project cost and schedule for planned capital
projects in order to measure the project's performance. See DOE,
Program and Project Management for the Acquisition of Capital Assets,
DOE O 413.3B (Washington, D.C.: Nov. 29, 2010).
[11] The delay between completion of construction and the date of
operation allows for equipment to be prepared for use and workers to
be trained on new equipment, among other things.
[12] [hyperlink, http://www.gao.gov/products/GAO-09-3SP].
[13] An independent cost estimate was initiated in 2011 covering the
design and infrastructure needed to complete the CMRR nuclear facility
project, such as concrete batch plants and equipment storage, which
represents only $250 million of the estimated total project cost.
[14] Actual pit production will not take place in CMRR, but it will
provide plutonium-related analytical capabilities to support pit
production being done at another facility known as PF-4, which is
located within Los Alamos's Technical Area 55. The purpose of the pit
production program is to re-establish the capability to produce pits,
which were formerly produced at the Rocky Flats Plant outside of
Denver, Colorado, until 1989 when operations there ceased.
Responsibility for pit production was then assigned to Los Alamos in
1996.
[15] Weapon types in the nuclear weapons stockpile include the W78 and
W87 warheads for intercontinental ballistic missiles used by the Air
Force; W76 and W88 warheads for submarine launched ballistic missiles
used by the Navy; B61 and B83 bombs used by the Air Force; and the W80
warhead for missiles used by the Navy and Air Force.
[16] Los Alamos National Laboratory, Options for Plutonium-Related
Missions and Associated Facilities Between 2007 and 2022, LA-CP-06-
0957 (Los Alamos, NM: Oct. 10, 2006).
[17] Techsource Incorporated, Independent Business Case Analysis for
Construction of the Chemistry and Metallurgy Research Replacement
Nuclear Facility (Washington, D.C.: Dec. 21, 2006). The $179 million
cost difference represents the $4.175 billion estimate for the larger
31,500 square foot facility less the $3.996 billion estimate for a
smaller 22,500 square foot facility. The study results are based on
estimated project costs from fiscal year 2007 through fiscal year
2022. Estimated costs are shown in fiscal year 2006 dollars and are
not adjusted to reflect present worth or net residual value.
[18] NNSA has initiated a study considering implications of
potentially upgrading Livermore's nuclear facility security and hazard
categories for short periods to allow NNSA to continue and maintain
needed plutonium-related capabilities. An NNSA official told us that
NNSA is confident that the environmental pit testing capabilities will
be maintained somewhere.
[19] GAO, Guide to the Building Development Process: The First Phase:
Conceptual Planning, [hyperlink,
http://www.gao.gov/products/GAO-04-859G] (Washington, D.C.: July 2004).
[20] NNSA and Los Alamos have considered using space in Los Alamos' PF-
4 plutonium facility to handle additional plutonium-related research.
However, NNSA officials told us that operating at this high pit
production range would also likely use all of PF-4's capacity. As a
result, NNSA would have to consider reducing or eliminating other
mission work currently supported in PF-4 or modify CMRR to incorporate
additional needed space at additional cost.
[21] NNSA, Los Alamos National Laboratory Chemistry and Metallurgy
Research Facility Replacement Project Mission Need Statement (Jan. 15,
2004).
[22] Los Alamos officials told us that one of the major uses of CMRR
storage space will be to relieve vault storage space at its plutonium
facility that has already reached its available storage capacity.
[End of section]
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